krungsri’s business strategy - mufg.jp · •test • test/migration ... btmu bangkok branch...

A member of MUFG, a global financial group

Krungsri’s Business Strategy

6 April 2015

Krungsri's Business Strategy | 6 April 2015

2

This document contains forward-looking statements in regard to forecasts, targets and plans of Bank of Ayudhya Public Company Limited (“KS”) and its group companies (collectively, “the group”). These forward-looking statements are based on information currently available to the group and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see other financial disclosure and public filings made or will be made by KS and the other companies comprising the group, for additional information regarding such risks and uncertainties. The group has no obligation or intent to update any forward-looking statements contained in this document

In addition, information on companies and other entities outside the group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by the group and cannot be guaranteed

The financial information used in this material was prepared in accordance with accounting standards generally accepted in Thailand

Table of contents

Who is Krungsri 4

Key Financials & 12Development Highlights

New Krungsri - Integration 18and Synergies with BTMU


4 Krungsri's Business Strategy | 6 April 2015

Who is Krungsri

Our History


1945 Officially established

2007 Bank of Ayudhya, “Krungsri” and GE became strategic partners

2008 Acquisition of GE Capital Auto Lease, subsequently renamed to Krungsri Auto

2009 Acquisition of AIG Retail Bank Pcl. and AIG Card (Thailand) Co., Ltd.

Acquisition of CFG Services Co., Ltd. (Srisawad), a micro finance business from AIG

Acquisition of GE Money Thailand, a consumer finance company

2012 Acquisition of HSBC Thailand’s retail banking businesses

Dec 2013 BTMU replaced GE as the strategic shareholder of Krungsri

Jan 2015 Integration of BTMU Bangkok Branch into Krungsri

BTMU, 76.88%

Ratanarak Group & Others, 23.12%

Shareholding Structure

Facts about Krungsri


Personal Loan

• 3.2 million accounts• 27% market share

11

Credit Card11• 3.7 million accounts• 15% market share

Auto (HP)

• # 1 in used car financing• 18% market share

22

Commercial Banks

Thai Banks Ranking

by Assets, Deposits and Loans

5

THB 271.8 bn*Market Capitalization 11SET Ranking

Sales, Profits, Assets and Market Capitalization

1,259 ForbesThe Global 2000

Global Ranking

* Stock Exchange of Thailand (30 December 2014)

Highest rating (A-) among top banks in

Thailand by Fitch Ratings1

Credit Ratings

Our Strong and Broad Franchise

ATMs Domestic Branches Overseas Branches Exclusive Banking & Business Center

First Choice Micro Finance Krungsri Auto EDC


5,103 644 3 74

616 Banking Branches

28 Auto Business Branches

323 6,300 Dealers 38,39178 Branches + 13,870 Dealers

Our Broad-Based Alternative Channels

SMS Banking Internet Banking

Krungsri Mobile Krungsri Website Social Networks


1.4 Million Users 700,000 Users

800,000 Users 50 Million Page View 1,150,000 Users

Krungsri Group Companies


Credit Card, Personal Loan & Sale Finance• Krungsriayudhya Card Co., Ltd (KCC) - 99.99%• Ayudhya Capital Services Co., Ltd. (AYCAP) - 99.99%• Tesco Card Services Ltd. (TCS) - 50.00%• General Card Services Ltd. (GCS) - 99.99%

Auto Hire Purchase and Leasing• Ayudhya Capital Auto Lease Plc. (AYCAL) - 99.99%

Collection Services• Total Services Solutions Plc. (TSS) - 99.99%

Micro Finance• CFG Services Co., Ltd. (CFGS) - 99.99%

Investment Management• Krunsri Asset Management Co., Ltd. (KSAM) - 76.59%

Securities• Krungsri Securities Plc. (KSS) - 98.71%

Leasing• Ayudhya Development Leasing Co., Ltd. (ADLC) - 99.99%

Factoring• Krungsri Factoring Co., Ltd. (KSF) - 99.99%

Support Business• Siam Realty and Services Co., Ltd. (SRS) - 99.99%

Asset Management• Krungsri Ayudhya AMC Ltd. (KAMC) - 99.99%

Krungsri Credit Ratings

• After Krungsri became a strategic member of MUFG/BTMU in late 2013, credit ratings were upgraded with the rationale that Krungsri is strategic importance to BTMU and thus will benefit from parental support from BTMU.

• Krungsri’s ratings are now on par with other top banks in Thailand.


International Ratings

Fitch Ratings Moody’s Standard & Poor'sForeign currency

Long Term Outlook

ForeignLong Term

Deposit Outlook

Issuer Credit Rating

Long Term Outlook

Krungsri A- Stable Baa1 Stable BBB+ Stable

National Ratings

Fitch Ratings TRIS Rating

Foreign currencyLong Term Outlook

ForeignLong Term

Deposit Outlook

Krungsri AAA (tha) Stable AAA Stable

Krungsri Auto1 na na AA- Stable

CFGS2 na na A- Stable

1 Ayudhya Capital Auto Lease Pcl. (AYCAL)2 CFG Services Co., Ltd. (CFGS)

What Guides Krungsri


Krungsri MISSION

“To be a leading regional financial institution with global reach, committed responsibly to meeting the needs of our customers and serving society through sustainable growth.”

Krungsri VISION

“Highly qualified team of professionals providing innovative products and services, dedicated to becoming our customers’ number one preferred financial group.”

Krungsri VALUES

• Integrity• Team Spirit• Customer Centricity• Passion for Excellence• Embracing Changes• Global Awareness


Key Financials & Development Highlights

Loans & Deposits(THB Bn)

Net Interest Margin (NIM)(%)

NPLs & Coverage Ratio(THB Bn)

Fees & Service Income(THB Bn)

Capital Base(%)

NET Profit(THB Bn)

5 Year Financial Highlights


649.0 719.5 830.0

943.5 1,012.8

576.5 560.5 687.2 764.1 837.6

2010 2011 2012 2013 2014

4.60% 4.51% 4.33% 4.37% 4.32%

38.1 29.5 21.3

27.0 29.9

89%106% 146% 145% 133%

12.90 13.84 16.43 18.54 19.19

8.82 9.30

14.67 11.98

14.32

2010 2011 2012 2013 2014

NPLs (THB Bn)

NPLs (%) of total Loans

Coverage ratio (%)

2010 2011 2012 2013 2014

2.7%2.4%3.7%5.5% 2.8%

2010 2011 2012 2013 2014

1

11.54%11.85%10.94% 10.17%

10.98%

4.30% 4.44% 6.00%4.51% 3.71%

Tier 2 Tier 1

2010 2011 2012 2013 2014

15.84%16.29%16.94%14.68%14.69%

CAR required by BOT at 8.50%

2010 2011 2012 2013 2014

(Note) 1. Bank only (BASEL III effective in January 2013)

Consolidated

Bank only

Loans Deposits

2014 Key Financial Highlights


Deposit Growth(THB Bn)

Loan Growth(THB Bn)

Fee Income Growth(THB Bn)

Cost-to-Income Ratio

18.5

19.2

2013 2014

943.5

1,012.8

2013 2014

764.1

837.6

2013 20142013: +11.2%

CASA

NIM

NPL

Coverage

51%

4.32%

2.79%

133%

48.47%

2013: 48.91%2013: +14.2%

+3.5% YoY

2013: +13.7%

+9.6% YoY+7.3% YoY

Consolidated

SME Loan(THB Bn)

Corporate Loan(THB Bn)

December 2014

Broad-Based Growth Across All Business Segments in 2014


269.4

295.0

2013 2014

206.5220.7

2013 2014

+6.9%+9.5%

Retail Loan(THB Bn)

467.7

497.2

2013 2014

+6.3%

Retail

Auto HP 24%

Mortgage 13%

Credit Card & Personal Loans 12%

Retail49%

Corp29%

SME22%

THB 1,012.8Billion

Retail40%

Corp40%

SME20%

42%

SME18%

Consolidated

After BTMU Integration


2014 2014 Targets

Loan Growth (Net) +7.3% +7% NPLs Ratio 2.79% ~ 2.9% Deposit Mix: Savings and Current 51% ~ 50% Loan Mix : Retail 49% n.d. L/D Ratio 121% n.d. L/Deposit+Debentures+B/E 106% 100% ~

NIM 4.32% ~ 4.2% Fee Income Growth (YoY) 3.5% 5% ~

Cost to Income Ratio 48.47% < 49% Provisions 179 bps ~ 170 bps ~

Loan Loss Coverage 133% 125-130% CAR (Bank Only) 14.7% n.d.

Satisfactory Performance Despite Challenging Environment

Thai economy is expected to return to more normal growth in 2015


% y-o-y growth unless otherwise stated 2013 2014 2015F

GDP

Private Consumption

Private Investment

Exports ( In USD terms)

Headline Inflation

Policy Interest Rate (%, end of period)

3.8‐4.8

2.7－3.7

6.0－8.0

2.0‐4.0

0.8－1.3

1.75 - 2.00

0.7

0.3

-1.9

-0.3

1.9

2.00

Economic growth is projected to improve moderately to 4.3% in 2015 from 0.7% in 2014.

• Accelerating public spending, stimulus measures, infrastructure projects

• Recovering household spending, business investment and tourism sector

• Moderate global economic recovery and plunging global oil prices

2.9

0.3

-2.8

-0.2

2.2

2.25

Note: * 2014-2015 forecast by Krungsri Research (as of December 2014)

Forecast *


New Krungsri - Integration and Synergies with BTMU

20152014

2013

PreparationIntegration Period

New Krungsri

Krungsri & BTMU Integration


Events

System Development &

Integration

BTMU HO, BTMU Bangkok Branch and Krungsri collaborated to work with the necessary preparation.

Krungsri became strategic member of MUFG.

• Basic design• System development• Test• Test/Migration

• Gap analysis• System solution

design• Conceptual

design/ planning

Successful integration of BTMU Bangkok Branch & Krungsri.

New Krungsri – A bank with global capabilities and connections.

Successful Integration with BTMU Bangkok Branch


• MUFG’s ownership in Krungsri through BTMU increased from 72.01% to 76.88%

• JPC/MNC Banking Group was established as a result of the integration of BTMU Bangkok Branch with Krungsri.

President and CEO

Commercial Banking Retail and Consumer BankingJPC/MNC Banking Chief Operating Officer

• Corporate Banking Group

• SME Banking Group

• JPC/MNC Banking Group

• Krungsri Auto Group• Krungsri Consumer

Group• Retail Banking and

Distribution Group

• Corporate Planning Group

• Marketing and Branding Group

• Operations Group• Information

Technology Group

Capitalizing on gain from BTMU’s global reach in terms of Japanese and MNC customer bases

Krungsri & BTMU Synergies started in 2014

Distribution Strategies

• Japanese desks • New branches in industrial estates• ATMs with Japanese language

Krungsri Thai Benefit Package – Launched July 2014

Unique financial package and services

Business Matching - September 2014

Opened up opportunities for our clients to tap BTMU’s global networks


Synergy with BTMU will be developed over the coming years


Krungsri & BTMU Synergy

Supply Chain financing

Business Matching

Cross-sell of Investment

Banking products

Cross-sell retail products

Tap Japanese customers and offer Krungsri Value Chain programs to

their dealers.

Create opportunities for Thai companies to expand into the

Japanese market, while providing a platform for BTMU customers to connect with Thai entrepreneurs.

The areas of focus are Debt Capital Market, Project financing,

and Securitization.

Leverage product offering capability to differentiate

ourselves from competitors.

Provide loan to local customers with collaboration with ECAs.

Approaching Japanese customers and acquiring payroll accounts to

be serviced by Krungsri.

Enhancing Japanese relationship of target Thai

Japanese JVs.

Thai Japanese JV with Japanese minority interest

Transaction Banking

ECAs

Global banking

network & business capabilities

Leading universal bank in Thailand with a

strong leadership position in consumer

finance

Complementary Benefits of the Combined Entity


5th Largest bank

# 1 Market share in Personal Loan

Global product offering capabilities

Strong MUFG Alliance

# 1 Credit card issuer

50+ years operation in Thailand

Strength in Retail & SME banking

#5

Local Corporates to Venture Abroad MNCs Looking to Localize within Thailand and the Region

New Krungsri – A bank with global capabilities and connections


• Internationalization strategies of the Thai corporate

• Market entry and the search of opportunities of international MNCs interested in investing

and/or transacting businesses in Thailand

Krungsri

Laos • Continue branch operation • Start up the Consumer Finance JV

Myanmar • Open rep office• Explore local partners

Cambodia • Explore local partners

Regional Expansion - Promote business in Mekong Region


• Krungsri and BTMU together are already presented in CMLV, through the establishments of branches,

representative offices, joint ventures, and strategic investment

• BTMU and Krungsri together will expand its footprint across the Greater Mekong area, bringing in further

diversification of geographical mix and capturing Asian growth into the group

Leverage MUFG‘s Existing Presence and Network

Myanmar • Rep Office in Yangon• Alliance with CB Bank

Cambodia • Rep Office in Phnom Penh

Vietnam • Branch in Hanoi and Ho Chi Minh• VietinBank --- BTMU holds 20% share

Extensive Franchise: 22,383 Service Outlets

Krungsri Group Profile


As of December 2014 Number

Domestic Branches 6441

Overseas Branches 3

ATMs 5,103

Exchange Booths 91

Exclusive Banking Zones 19

As of December 2014 Number

Krungsri Business Centers 55

First Choice Branches 78 Branches

+ Dealers + 13,870 Dealers

Krungsri Auto Dealers 6,300 Dealers

Micro Finance Branches 323

Thai Post Offices > + 1,000

International Ratings

Fitch Ratings Standard & Poor's Moody’s

A- BBB+ Baa1

National Ratings

Fitch Ratings TRIS Rating

AAA (tha) AAA

Leadership PositionIn consumer finance

As of December 2014 Market Position Share

Consumer

Personal Loan 1 27%

Credit Card 1 15%

Auto (HP) 2 18%

SME 5 7%

Corporate 5 8%

1 Krungsri Domestic Branches = 644 Branch, of which 616 are Banking Branches and 28 are Auto Business Branches

Bank of Ayudhya Public Company Limited1222 Rama III RoadBang Phongphang, Yan NawaBangkok 10120Thailand

www.krungsri.com


Join us!

www.facebook.com/krungsrisimple

www.twitter.com/krungsrisimple

Contact Investor Relations Department : Telephone : (662) 296 3778

Fax : (662) 683 1341E-mail : [email protected]

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